Currency Swap (Demonetisation) - Why don't people mind standing in queues?

Government of India on November 8th, 2016 withdrew the legal tender to 500 and 1000 rupee notes. It's technically not demonetisation since the 500 rupee and 1000 rupee notes are coming back. Essentially, at the end of the day, old 500 rupee notes are replaced by new 500 rupee notes. The replacement of notes is a regular process, the only difference this time is that it's sudden and not gradual like previous instances. So, some have pointed that the right term is 'currency swap' and 'not demonetisation'. For instance, Mint editorial uses the term 'currency swap' and not 'demonetisation'. So, let's use the term 'currency swap'.

One of the immediate effects of the poorly executed 'sudden' 'currency swap' is that it takes long to replace the notes, creating a shortage for notes. People have to hence stand in long queues. In a normal world, where 86% of the medium of exchange is sucked out, it should have created huge unrest and riots. The question then is - why didn't that happen? Why are people not protesting? For the sake of this post, let us stick to a narrow question of long queues to with draw or exchange money, and not on lost wages, employment and a business down turn.

One argument can be that people are willing to undergo this pain to be as part of a process for the sake of a larger good. The thought of 'sudden evaporation' of 'huge black money' is consoling to the people, even if such assumptions are questionable. In Marxist terms, currency swap has tapped into huge class hatred, ironically making the working class punish themselves with the hope of inflicting  a proportionate pain on bourgeoisie.

One can analyse the situation using the framework of class but through a different lens. Let's assume that people can be divided into three class - rich, middle class and the poor. 

The rich don't have issues with currency swap because they can either get their money through a) connections b) paying people to stand in queues; or c) using card transactions.

After initial hiccups, the middle class has also found their way out. They have figured out appropriate connections in their network - people who work in banks, to get the required money. So, the middle class also don't have much to complain about.

The poor without access of any of the avenues available to the rich and middle class are the ones who are standing in long queues, often foregoing days of labour, surviving on the brink. They should have a lot to complain about. Probably they aren't complaining as much as they should have because they are accustomed to such situations. What does it mean?

The public service delivery systems in India are pathetic. It's difficult to get any work done in a government office without appropriate connections or paying a bribe. In such cases, like the currency swap, the rich have a way out because most often they don't need such services like ration card, land issues, income certificate etc. Even if they have some work, they get done through connections or happy to pay a bribe. Same is the case with middle class. 

The sufferers are the poor. They often travel long distances to reach district head quarters, spend days outside offices, request officials for their attention, and if needed pay a bribe. Similarly, getting access to many other things involves a lot of struggle. The poor have to stand in long queues to get drinking water. They stand in long queues to get ration etc.

By the virtue of having to wait for long for every service and experiencing constant lack of apathy, the default expectation of service quality for the poor is at an extremely low level. With time, it might have made them resilient to such long waiting times and poor quality of service. So, when the currency swap decision came, the experience of standing in long queues was nothing new to them. It's something that they have been accustomed to. The only difference is that they are doing this for a new service this time. One more service has gotten added to their list of 'things to be struggled for'. Probably, that's the reason there isn't outrage about having to stand in queues (leaving the opportunity cost aside for  a moment and focusing only on the waiting time for now).

In order to appreciate the automatic ingraining of resilience to poor service, one should experience getting a work done in a government office. They make you wait so long and make you roam around so much that after some time, an extra day of waiting doesn't pinch you much.

In summary, the rich and the middle class don't mind standing in queues because probably they may not need to stand in queues. In case of the poor, the roots of lack of outrage for having to wait in queues due to currency swap may be traced to the resilience ingrained in the poor over time, through constant exposure to poor public service delivery. The argument is not that this is the only reason but it could also be a reason. Of course, all of this is post-facto analysis trying to explain an observed behaviour. May be one couldn't have argued on these lines, if one were to predict the behaviour before the decision. In fact, one would have predicted huge unrest.

On a related note, all the currency swap experience illustrates the life of a socialist economy - rich and middle class having their way out largely due to connections and networks, the poor suffering in long queues.


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